Is a Flood of Federal Contract Dollars Coming?
Published: April 04, 2013
Due to the funding bottleneck we like to call Sequestration, agencies still have a large percentage of their average contracting dollars to spend in the last 6 months of FY 2013. Add to this the fact that agencies have obligated far fewer contract dollars to date than is typical and the outlook for vendors in the federal market over the next 6 months is better than many think.
- FY 2013 dollars obligated under PSC M181 Operation of Government-Owned/Contractor Operated Facilities is equal to 42% of the total average dollars obligated in FYs 2011 and 2012.
- The lowest percentage of FY 2013 dollars obligated so far is under PSC R499 Other Professional Services. This is equal to 23.5% of the total average dollars obligated in FYs 2011 and 2012.
- The highest percentage of FY 2013 dollars obligated so far is under PSC 9660 Precious Metals Primary Forms. This is equal to 57% of the total average dollars obligated in FYs 2011 and 2012.
- The percentage of dollars obligated to date under technology PSCs D399 Other ADP & Telecommunications Services, R425 Engineering & Technical Services, and 7030 ADP Software equal 31%, 25%, and 50% respectively, suggesting that spending on technology solutions will remain robust.
- The DoD has obligated only 15% of the contract dollars that it historically spends under PSC R425 Engineering & Technical Services.
- Defense agencies have obligated only 13% of the contract dollars that they historically spend under PSC D399 Other ADP & Telecommunications Services.
- Defense agencies have obligated only 31% of the contract dollars that they historically spend under PSC R499 Other Professional Services.
- Defense agencies have obligated only 19% of the contract dollars that they historically spend under PSC R706 Logistics Support Services.
The media has been saturated with stories of budget cuts and falling federal spending, but the reality is that agencies were hesitant to spend contract dollars during the first half of FY 2013 due to policy uncertainty from Congress and the White House. Now that agencies have budgets for the remaining six months of FY 2013, we expect agency spending will be significantly higher through the end of September. Agencies are likely to be very aggressive in trying to obligate as many dollars as possible before the end of the fiscal year. With the exception of some multi-year appropriations and funding authorized for reprogramming, agencies must expend their funding within the fiscal year or risk losing it. The challenge will be speed. Overworked contracting shops catching up on stalled procurements and getting a late start on coming acquisitions will struggle, but the fact remains that the federal Government has tens of billions of dollars to spend on vendor-provided goods and services. Is your company ready to capture some of this business?